While researching a HUD database for clues on Thomas Lawler, the frequently-cited foreclosure and heavy-metal loving “housing economist” often cited by the business media, and a favorite of Calculated Risk, I came across background information that raises more questions than it answers.

In the spirit of CR’s former housing writer, Doris “Tanta” Dungey, who did not seem to hesitate to present puzzling information and ask her readers what they thought it meant, I thought I’d do the same. Tanta passed away of cancer at the age of 47 in late 2008 and it’s a shame CR has discontinued the practice.

Starting in 1998 Thomas Lawler held the job of SVP Portfolio Management, SVP Financial Strategy, and SVP of Risk Strategy at Fannie Mae until he unceremoniously left in January, 2006, following an $8 billion financial fraud that occurred under his watch. Lawler, along with the rest of Fannie’s executive team, cooked the books spectacularly. That was back in the early 2000s, when a billion dollars was still real money.

Lawler’s Project Libra

It’d be impossible to summarize Lawler’s ethical mosh-pit better than OFHEO, Fannie’s former regulator which morphed into the FHFA, already did so I’ll just cut-and-paste from their 2006 “Report of the Special Examination of Fannie Mae” (emphasis mine):

According to Thomas Lawler, Senior Vice President for Portfolio Management, when Fannie Mae entered the income-shifting REMIC transactions, the Enterprise was concerned that the steep decline in interest rates in 2001 would cause higher near-term and lower long-term recognition of income under GAAP. Mr. Lawler explained that in the context of developing strategies to address that concern, Peter Niculescu, Senior Vice President for Portfolio Strategy, may have suggested the income-shifting REMIC idea. He was not aware of anyone senior to Mr. Niculescu playing a role in initiating the transactions.

Andrew McCormick, Senior Vice President for Portfolio Management (then reporting to Mr. Lawler), indicated he believed Goldman Sachs (Mr. Niculescu’s former employer and the underwriter of the transactions) was the source of the idea.209 In fact Goldman Sachs described the proposed transaction in a November 19, 2001, presentation to Fannie Mae. David Rosenblum, a Goldman Sachs managing director, attached PowerPoint slides for the presentation to a December 3, 2001, e-mail to Mr. Niculescu. Mr. Rosenblum referred to the project as ‘Project Libra.’

Mr. Lawler acknowledged that a motive for creating the REMICs was to effect ‘a change in the expected [pattern of] recognition [of income].’ He also emphasized that without the income-shifting REMICs he did not believe the GAAP earnings that the company would have realized would have accurately reflected the underlying economics. Although he referred to economics, Mr. Lawler was actually talking about the GAAP accounting mismatch Goldman Sachs cited. In an e-mail to a colleague, Jeff Juliane, who, as a member of the Office of the Controller had operational responsibilities for accounting for premiums and discounts on the tranches Fannie Mae retained, ‘these (REMICs) were structured to transfer income from 2002 to out-years.’

Is it just me or, in much the same way every fairy tale starts with “Once upon a time,” every government report on a major scam seems to include the line “Goldman Sachs described the proposed transaction.”

Back to the point, the report makes it clear that Thomas Lawler’s Fannie Mae didn’t play well with Patrick Lawler’s (no relation) OFHEO. At one point when OFHEO provided Congress with Fannie executive compensation Fannie “suggest[ed] that members of Congress might face criminal sanctions if they made the information public,” according to the OFHEO report.

A few months before that scathing report was released Thomas Lawler unsurprisingly left Fannie Mae, moving to a rural farm and into semi-retirement. But Thomas Lawler’s version of “retirement” was to join the Board of Directors of one of John Paulson’s hedge funds as Paulson was famously buying CDS short positions.

Unsurprisingly once Lawler jumped to Paulson he quickly became bearish on real-estate prices. “Poison Said It All in 1990 in a Song Reportedly Inspired by a Mortgage Lender After Housing Crashed that Year, and Low/No Doc (“Liar”) Loan Defaults Skyrocketed,” Lawler wrote in his presentation, going on to spell out the lyrics. That presentation ends with a cute graphic of “Franklin, the Fair Housing Fox,” a likely reference to Lawler’s former boss Fannie Mae CEO Franklin Raines.

Somehow between the heavy-metal lyrics and kitschy graphic I can’t find a disclosure anywhere that Lawler’s new boss was massively shorting the housing market. An oversight, I’m sure, as Lawler was focused on remaking himself from an executive at the center of a massive scam to a “housing economist” in the public image.

Soon after it became clear that the payout to Paulson looked inevitable Lawler switched his position again, arguing the now well-known Big Lie that increased foreclosures also increases home prices. As early as June 13, 2008, while Bear Stearns was barely dead and Lehman Brothers still barely alive, the Wall Street Journal quotes Lawler opining about the economic benefits of “bargain hunters scooping up foreclosed homes from banks,” no matter that these same “bargain hunters,” likely ended up massively upside-down soon after.

Lawler also went after the jugular of real economists who disagreed with him, most notably Yale University economist Robert Shiller, co-inventor of the famous Case-Shiller home price index, which Lawler called “bogus,” in an April 24, 2009 WSJ article announcing that Thomas Lawler has created his own index: “Mr. Lawler has created an adjusted version of the Shiller chart, backing up [Thomas Lawler’s] view that house prices already are nearing a bottom in much of the country.” Shiller responded in the article that Lawler was making “wild allegations.”

I suppose “wild allegations” is a toned down version of what most people would have said, which would be something along the lines of “WTF – Lawler’s a known housing fraudster who cooked the books in an $8 billion scam: why are you listening to him?” though academics rarely talk like that, unfortunately.

Needless to say, Lawler’s 2008 housing bottom didn’t quite work out that way, nor did his view that Shiller’s index was incorrect, but most pundits pass over those small issues the same way that prosecutors passed over indictments in the Fannie accounting fiasco.

The Surprise In the Desert

Back to that primary research based on the HUD data during and after the time that Lawler was managing Fannie’s portfolio, financials, and risk. It turns out that Fannie had an appetite for financing homes in some ZIP codes at rates wildly higher than others. I compiled about 26 million loan-level records that Fannie and Freddie acquired between 2004-2007. Fannie and Freddie don’t lend directly — they buy loans from banks — so this data-set would be from the time Lawler was at the height of influence setting policy there.

Fannie and Freddie’s loans use MSA rather than ZIP codes but I cross-referenced them to ZIP codes using tables provided by the Census Bureau. MSA codes sometimes span a small number of ZIP codes, so when there were multiple ZIP code possibilities I’d choose the ZIP code with the highest proportion of residential properties. This could result in slight overconcentration, though the error rate doesn’t matter given the extremes I found in the data.

Certain communities were much more likely to receive loans from the GSE’s than others. Surprise, AZ, in ZIP code 85374, is #1 with 24,788 loans, a 14.7 standard-deviations above the other 20,821 ZIP codes which have a mean loan volume of 532 loans each. The Census Bureau reports Surprise, AZ grew 281% from 2000 to 2010, to the current population of 117,517. As Yves would say, Quelle Surprise, though this time literally.
There are 52,586 housing units in Surprise so it’s safe to say the town is akin to some sort of modern Hoover Dam project, a large scale building project, in the middle of nowhere, built with government money. Except the spending occurred during an economic boom, and is now curtailed thanks to a corresponding economic bust. Actually, the government didn’t really mean to spend the money — during that time Fannie and Freddie were private — so it was GSE executives, especially Lawler, who decided to build a town in the middle of nowhere.

One statistic that comes through clearly is Lawler’s preference for fast foreclosures. All top ten ZIP codes by loan volume are in non-judicial foreclosure states: five in CA, two in AZ, and one each in NV, NC, and TX. We have to drill down to the seventeenth position until we find a judicial ZIP code.

It isn’t clear how Fannie and Freddie decided to hyper-concentrate their loans in a few distinct areas since majority of ZIP codes received less than 1,000 loans. Almost all the high volume ZIP codes are exurban construction boom-towns: environmentally irresponsible far-flung bedroom communities that externalize the cost of construction to everybody except the builders who disappear even faster than the demand for shiny new properties to flip.
Other stats also pop out. For example, the average age of the primary borrower in this large sample is 44 1/2, so they’ll pay off their 30-year mortgages when they’re a spry 74.5 years-old. That obviously doesn’t bother Fannie and Freddie who wrote at least 9,821 loans to people 90 years and older. Fifteen loans went to people one hundred years and older. I understand that age discrimination is illegal but given all the other exemptions Fannie and Freddie received — which includes virtually everything — you’d think they’d lobby for the ability to question the ability of centenarians to repay their 30-year loans.

Many people question the role Fannie and Freddie played in the subprime meltdown. Gretchen Morgenson and Josh Rosner convincingly argue in their book on the subject, Reckless Endangerment, that the GSE’s created an anything-goes culture which private lenders picked up to compete. This data supports that theory: Fannie and Freddie led the way while private money followed.

It’s not clear why CR and so many mainstream media outlets blindly quote Fannie Mae’s former economist, allowing him to “move on” from some spectacularly poor decisions that led to painful costs borne by everybody else. We continue watching the bailout money quietly flow and I wonder when “personal responsibility” for one’s prior decisions became an exclusive obligation only for those neither wealthy nor well connected.

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Certain communities were much more likely to receive loans from the GSE’s than others. Surprise, AZ, in ZIP code 85374, is #1 with 24,788 loans, a 14.7 standard-deviations above the other 20,821 ZIP codes which have a mean loan volume of 532 loans each. The Census Bureau reports Surprise, AZ grew 281% from 2000 to 2010, to the current population of 117,517.

Sounds like front behavior for organized crime. Might be interesting to know something about the companies involved and their funders, principals etc.

I’m confused. My understanding is that F&F don’t originate mortgages at all. How could they “lead the way” when they only purchased mortgages in the secondary markets? Also, my understanding is that F&F didn’t even get into purchasing the dreck until very late in the game and that was only to avoid losing even more market share. I’m not defending them. They’re clearly crooked and incompetent. But they are certainly not worse than Countrywide and its ilk…

They’d work closely with originators. Remember, they were “private” companies, so when the wanted to see something happen it’d miraculously happen. I’ve sent a spreadsheet w/ the ZIP codes, counts, and stat calculations to Yves; not sure if there’s a way to post it or not. There’s a sizable number of “coincidences” (*cough*) at both the top and bottom that could stand to be explained since we’re all paying for them now.

I’m sure it’ll come as a shock but, despite an unambiguous mandate in HERA 2008 to release loan-level info, Fannie hasn’t released anything since 2008 until a few weeks ago. They just started to release LL info on newly originated loans, but I haven’t yet seen anything on the legacy loans. Freddie released better legacy LL info though, for $180+ billion, I’d expect it to be a lot tighter. For that much money the American public should know what they’re buying.

You can lead from the rear. Surprise and the other towns were created because of GSE underwriting. If the GSEs were willing to underwrite housing developments in the middle of nowhere by purchasing mortgages from the originator/lender — without regard to the high concentration of risk (24,000 mortgages in a town of 117,000 people!)– then towns like Surprise that defy economic and environmental logic get built and sold as bubble prices make the homes (30-year mortgages on 15-year construction) seem “affordable” to first-time home buyers and “cheap” to speculators.

I’m surprised Lawler was able to switch sides and disseminate bearish information without some sort of confidentiality agreement being invoked by his bullish former employer. Or do they not require the 1% to sign confidentiality agreements?

I’m confused too. I thought F&F insured mortgages meeting certain standards, generally maximum loan amount. Why would they purchase mortgage backed securities they were already insuring the underlying mortgages? Was this some kind of accounting scam to create earnings and executive bonuses? Has anyone written at length about F&F?

I know that Doug Noland wrote a lot about FannieFreddie in his Credit Bubble Bulletin section of the Prudent Bear Website. I don’t know how easy it would be to find those CBB articles archived anywhere. ( I also lack the financial-education background to know if they were really any good. They seeeeeeemed good, but I don’t know if they really were).

It may not “Surprise” you to know that the zip code you cite with the most GSE loans, 85374, has consistently posted a very high foreclosure rate over the past few years, according to RealtyTrac data.

The peak foreclosure rate for the zip code was in 2009, when we show 7.20 percent of housing units in the zip code had a foreclosure filing, compared to 2.21 percent of housing units nationwide. The foreclosure rate in the zip code went down to 6.68 percent of housing units in 2010 and was at 4.75 percent of housing units in 2011.

Despite the decrease, the zip code still had an above-average foreclosure rate in February, when one in every 118 housing units had a foreclosure filing (compared to one in every 312 housing units statewide and one in every 637 housing units nationwide.

If you’re interested in lining up foreclosure rates by zip code against the data you have, let me know!

I’m not: I’m trying to remind the world, who keeps listening to his advice, that Tom Lawler has serious baggage. Lawler is influential — people are buying houses on his advice that there’s a housing floor (never mind the shadow inventory) — and they deserve some perspective.

If Lawler were running around and saying nonsensical things but nobody listened to him I wouldn’t mind. But instead he does things like “prove” higher foreclosures result in house price appreciation by using completely flawed analysis, to the point it’s arguably dishonest. For example the comparison of two state’s (MD and VA?) that turned out to be peak-to-trough when he had to have known one state had run up way higher than the other, and they were likely regressing to the mean.

That made me ask “who is this guy?” and, when I found out, that prompted me to write about him.

I think a lot of people confuse To Lawler with Patrick Lawler, chief economist of OFHEO, the predecessor to the FHFA and former regulator of Fannie and Freddie. Patrick really is a housing economist whereas Thomas is more of a .. I’m not sure what’s the right word. I was going to say businessman but business-people don’t get caught up in $8 billion frauds then “move on” like nothing happened.

1. Everything Michael relied on is public information. There was no need to verify accuracy. And how is it trashing someone to reveal their record? Discussing someone’s history is damaging only if they’ve tried hiding or misrepresenting it.

2. This blog regularly shreds disinformation campaigns. Go click on “Media Watch” under Categories in the right column. I’ve gone after plenty of journalists and pundits without contacting them first. Ditto with Kathryn Wylde (NY Fed governor), Kathy Patrick (attorney on BofA settlement), Tom Deutsch (lobbyist, head of American Securitization Forum), the firms SolomonEdwards and K&L Gates….and that’s just off the top of my head.

3. There is a much greater public interest issue here. Lawler is running a line that is nonsensical (more foreclosures will raise housing prices) and is damaging from a policy perspective. Plus you have the additional issue that encouraging people to buy housing, ex in particular markets where conditions are favorable, is likely to prove not to be good investment advice.

You are now just doing broken record. You can’t point to anything factually inaccurate about the piece, and that’s because it draws on the reporting of the Wall Street Journal, the results of a regulatory investigation into accounting fraud at Fannie, and Lawler’s past presentation on this topic.

Yves, why in the hell are you attacking me? I admire your work and have followed it with interest for years, just as I have followed CR’s, which is how I became familiar with Lawler’s work.

You say that I can’t point to any factual inaccuracies, then you fall back on the reputation of outfits like Wall Street Journal. Well, you shouldn’t have used them as an example because I haven’t read that rag since 1992. As you well know, they are part of “Disinformation Central.”

Look, I’m not trying to beat your head in, I’m just a guy who abandoned so-called mainstream opinion hacks long ago because I thought folks like you set a higher standard for yourselves.

All I’m saying is this: if you’re going to bash people, at least try to get their side of it, or provide them with an opportunity to respond. I always thought there were at least two sides to every story.

You still have not addressed my issue. Do you have any basis for disputing the information presented? Saying “I don’t like the WSJ” does not cut it. And you came out swinging at Olenick with NO factual support whatsoever and kept it up after he responded. If you can’t take it, I suggest you not dish it out.

And the WSJ has had some very good reporters on the housing beat, such as Carrick Molencamp and Serena Ng (who were first to find Magnetar) and Nick Timirios. The Journal has stories up tonight, for instance, ” Obama Clears Sanctions Against Iran” and ” More Killings Called Self-Defense.” Your position seems to be that if a story is in the Journal, it isn’t true, ergo, these stories are also not true. Sorry, you have to do better than that if you are going to call a particular story into doubt.

This site has never done “he said, she said.” This site does analysis and commentary. Olenick’s information is all from credible sources that you can look at yourself. He also happens to have one of the best loan level databases in America (better in some respects; it’s being used by the regulator that has been the most serious about analytical work on housing and mortgages, he’s not at liberty to divulge publicly but I separately know who it is). So Olenick is a legitimate expert in this space too, a fact you appear not to realize.

mp also used terms that are belligerent -slime job, publicly trash- and does not acknowledge the response made to his first claim.
The technique is common, I think.
Make exaggerated statements and when called out on those statements profess hurt innocence that you were misunderstood.
People who do this are always “Just . . .” as in “Just joking. . .” when abusive and sarcastic comments are made; “Just being friendly” when hugs last too long; “Just saying . . . .” when no facts are presented, no logical argument made.

I never respond to someone who uses a pen name, which is always very disturbing. If that actual person hiding behind a pen name, which is an inernet red flag for mischief, actually wants to discuss facts, under his/her actual name and not a pen name (which is a red flag for mischief), go ahead under your own name and not a pen name (which is a red flag for mischief).

I hadn’t seen this thread. I tried writing to Tom once or twice awhile back but never heard back. Then I wrote a few pieces pointing out the issues where he could have reached out and still never heard back. Then I dug in, found out these issues, and he still hasn’t asked for my data or addressed the core issues (or, for that matter, refuted anything except the origin of HUD’s mascot). Darren from RealtyTrac contacted me and I sent it to him. Hopefully they’ll cross-referencing the high volume ZIP codes to later foreclosure volume and we’ll see what $180B in taxpayer bought us.

Yves is also careful, critical, and I send her data regularly.

I’m happy to share summary data, and sometimes detailed data. I can’t share all of it because that’s how I make a living, and besides there’s so much that the only way to share all of it anyway would be if people have industrial servers and know how to use them. But it’s all from public records so can be easily spot-checked. That is, it’s easy to go backwards and make sure everything matches but much harder to roll it up into a comprehensive whole.

Only either an idiot or a retired person who last year and this year ended his consulting business and has not made any money from his consulting busienss in over a year, but still writes about housing because so few analysts actually look at data, would respond to this disburbing post. I think I’m the latter, but I may be the former.

I won’t comment on the Fannie stuff, save that my first public presentation on concerns about a possible housing bubble was not after I left Fannie, but in 2005. It’s on the web, and yes, I had to tone in down, but it created a bit of a stir. For several years later, if I were Googled, this website caome up the most.

I was sorta weirded out about the post’s reference to a WSJ article in 2008 suggesting that I was calling a bottom. Here’s an excerpt from the article cited in this strange post:

“Florida just seems to be nowhere close to the part of cycle that California is in, which seems crazy given how bad things look there now,’’ says Mr. Lawler. “It means that price adjustments, even though they have been fairly dramatic, are not finished.”

Hmmm? I did not call a housing bottom in 2008. Mr. Olenick suggested I did, but his citation suggests otherwise.

On the Shiller long term HPI, Shiller’s HPI is only consistenly constructed back to 1987. Read his book. Data prior the 1987 are not constructed the same way. He knows that. Everyone knows that; it’s in the book. Try reading it.

I will admit, I’ve never been involved in badge making. I’cw never done an online pregnancy calender. I’m not rightly sure if that makes me not competent to discuss housing data.

I’d be more than happy to discuss with Mr. Olenick the Census 2010 data, the 2010 ACS data, the local realtor data on sales and inventories (I track most of the country), and, well other data. I don’t rightly know if Mr Olenick tracks data, but as Kirsten Dunst said in her best movie here, “Bring It On.”

the way our betters continue trickling down on us, we’re left no choice but to throw a necktie party for all the masters of the universe; if you don’t get your invite, just stop on by, i’m sure we can slip you in…
hee hee hee
ho ho ho
ha ha ha
ak ak ak
art guerrilla
aka ann archy
eof

I build businesses that involve data. Some do well, others not so well, but I’m proud to say that I’ve never had one nationalized and categorized a national economic disaster zone. I’m not an economist myself, never claimed to be one (I like being a businessman), though some figures are so far off-the-charts, like a 14.7 sigma deviation, that it’s not necessary to be one to see an area of concern.

Lately I’ve been counting houses and mortgages. There should be lots of accurate, consistent housing data because houses are large, expensive, recorded in public records, and seldom move. But the data is often anything but accurate or consistent, and you know that.

The WSJ article speaks for itself. You were trying to prove faster foreclosures increase home prices, a common theme that defies common sense, and one I’ve never understood nor found supporting data for. As part of that there was that “great bargain” theme .. in 2008. You were saying CA was further along than FL; you weren’t saying they were both basket cases.

I call it my housing MRI machine and when finished, or close enough, I’m happy to share some of its deeper mysteries. I’ll admit to being stumped why houses seem to linger in foreclosure until their loss severity approaches about 100%, then the foreclosures seem to magically speed up. CUNY found a correlation to MERS but most MERS loans are serviced by others, aren’t they? It almost looks like maybe investors and borrowers are both being shellacked by some third-party who weaseled into the middle while pundits blame anybody except the real culprits, who happen to be closest to the skunks that originated those same loans.

“I’ll admit to being stumped why houses seem to linger in foreclosure until their loss severity approaches about 100%, then the foreclosures seem to magically speed up. CUNY found a correlation to MERS but most MERS loans are serviced by others, aren’t they? It almost looks like maybe investors and borrowers are both being shellacked by some third-party who weaseled into the middle while pundits blame anybody except the real culprits, who happen to be closest to the skunks that originated those same loans.”

Most interesting, my dear Watson. I have had suspicions here to. I’ve heard the servicers are “fronting” interest payments to the MBS trust funds on mortgages in default. They also load up the borrower’s bill with huge late fees.

When the property is finally foreclosed on and sold, the proceeds are of course then owed to the trust fund.
But at this point the fronted interest is deducted and all the ridiculous fees the borrower didn’t pay are deducted. And the cool part is no one will argue them.

Another neat part about integrated banking is someone has better info than we do on how to value this MBS and when might be a good time to sell.

Course you need someone to sell to. Ben has already thrown his hat in the ring with MBS being the instrument of choice for QE3.

Dut to tie in with your observation, the game is no fun anymore once loss severity exceeds 100%. The pot is empty and its time to wrap up the foreclosure sale!

Michael is weirdly underselling himself, perhaps because his project is not completed. His loan level database is as big as Corelogic’s at this point. And it is being used in a heavy duty way by the regulator that considers itself to be the most serious about doing analytical work on mortgages and housing. So yes, he does have chops. And he’s in the process of building it out to include sources not used by Corelogic.

Who is this guy, Michael Olenick? What are his credentials? How long has he been following the housing market? What are his data sources? Has he been following the housing market for 30 years? 20 years? 10 years? What are his areas of expertise (not including badges and online pregancy tests). I am having a hard time finding his credentials, but I’m guessing somewhere out they exist.

A good place to start when researching questions like that, when there’s a link to author’s website, is to click the site link, then click again on the about page: there’s even a photo. People who gather data tend to have software backgrounds like me, or at least they should, and many software engineers tend to wander to the business side or co-mingle the two. That’s gone on for a very, very long time.

I’ve been doing essentially the same thing my whole life. My data sources on housing, a field I didn’t even find especially interesting not that long ago, are aggregate records I compile myself. I do that because those released by the industry are oftentimes inaccurate, incomplete, or like your former employer unavailable to the public at any level of granularity to make them useful. [The GSE data for the ZIP code count has no origination dates, only years the enterprises acquired the loans.] I’d assume internally they’re in better shape but given that the FHFA announced the GSE’s don’t have the tech to enable principal reductions that seems iffy.

Michael is probably a dog, somewhere on the internet. The more interesting question of course is, who are you Thomas? I kept wondering why CR offered you a repeat platform. Still don’t know, but it got more interesting.

Ha, IF, that was a good question for Thomas. Its pretty obvious as to what he is. A fucking crook. He seems real good at personal attacks on Michael Olenick, but not so good at answering any of the questions posed to him. CR must have had favors to repay….

Rather than constant “who-did-what and who-knows-better”, what I find discouraging is the lack of experts’ solutions for the problem. I was just litening to Ed Pinto on Mandelman Matters (excellent podcast) in which he declared that, currently, Fannie Mae is leveraged at 220 to 1 and FHA 850 to 1. He also states that the bubble resulted from government’s policies of not only allowing but even demanding that underwriting guidelines be relaxed, so as to give a chance to everyone to become a homeowner. That is unheard of in most, if not all, other developped countries, except for Spain. No credit, no down payment, 30-year loans, no compulsory life insurance to cover and pay the debt in case of premature death, none of the reasonably expected safeguards were respected. In fact, they were deliberately done away with.

My question to both Michael Olenick and Thomas Lawler is as follows: given what we now know, what is the first and foremost measure to take in order to stabilize housing prices and why? And, assuming that it is a solution already recommended by experts, why hasn’t it been implemented?

Rather than constant “who-did-what and who-knows-better”
The fact is people make decisions and need to be accountable or shitty things happen. We have witnessed time and time again that people that make decisions with less than the best intentions later try to evade responsibility for those decisions via redirection/misdirection, intimidation, finger-pointing, support from cronys/dupes/lackeys, etc.

“Who-did-what” and “who-knows-better” are fundamental to good governance, healing, and a brighter future for our kids. Anyone who is truly “enraged” knows that restoring accountability is crucial.

…government’s policies of not only allowing but even demanding that underwriting guidelines be relaxed…
I’m not sure how “enraged” you are if you have not been paying attention. The Financial Industry generally gets what it wants from government, not the other way around. But its _convenient_ to blame government after the fact isn’t it?

My question…
You don’t care “who-did-what and who-knows-better” but you are interested in solutions that are recommended by “experts?” News flash: those “experts” think they _know-better_, and many times they are the same people that _did-what_.

In conclusion, your “enraged” comment is either wrong-headed and out of place, or intended as a device to help Mr. Lawler. If the later – which frankly seems more likely – you have fallen way short as it only raises more suspicions.

“He also states that the bubble resulted from government’s policies of not only allowing but even demanding that underwriting guidelines be relaxed, so as to give a chance to everyone to become a homeowner.”

I would disagree with this. I can’t comment on how much underwriting guidelines might have been relaxed, however only the federal banks are subject to the guidelines issued by the federal government, such as the CRA, which I assume is what he was referring to. I also know that the default rate on these loans has been similar to those of prime loans so the guidelines must not have been relaxed too terribly much. Therefore, all the loans that were originated at mortgage brokers such as Countrywide, Ameriquest, New Century, etc., were not subject to any federal “relaxed guidelines”. They were the ones who wrote the subprime loans, the no-doc and liar loans, that blew up the market with high foreclosure rates. Also, the reason Fannie and Freddie relaxed their guidelines was because they had been losing so much market share.

Also, any statement that attributes the housing bubble to one factor is gross oversimplification. There were many factors, and relaxed underwriting guidelines is hardly at the top of the list. The demand for loans to securitize, the fraud in originations (failure to meet underwriting guidelines), fraudulent appraisals, AAA ratings assigned to MBS, credit enhancements with CDS, and the “housing prices never fall” meme were other factors that also played a part.

This is a good question but I’d say it probably can’t be answered until we have complete, accurate data. In that spirit I’d recommend that Reg AB be extended to all residential loans except maybe private lenders who own less than five (ex: people who privately financed the sale of their own house). Everybody, including and especially the GSE’s, should be required to publicly disclose loan level information, including all pool and tranche performance reporting, and to do so immediately.

I know they’ll scream this is an IT burden, and it is, but tough: much like a doctor needs an accurate reading on a sick patient to diagnose exactly what’s wrong public policy makers deserve to know exactly where the country stands. Once we have that we can intelligently argue about solutions. My guess, based on the data we have, is that some regions will require different solutions based upon how impaired the regional housing market is.

Speaking of impairment one issue Tom raised with his focus on long-term housing experience is why we’d only want to listen to the same people that burnt the market to the ground, crippling the world economy. If somebody had a lifelong career that ended up like, say, Steve Jobs, Bill Gates, or Larry Ellison — who make products people or businesses love with no government support — then, of course, we should listen to them. If they’re at the center of an $8 billion accounting scam in a field that goes on to demand and receive massive government support and that leaves their industry a massive mess it’s probably time for some fresh blood.

My guess, which the call for long-term experience suggests, is that Tom thinks nobody in housing finance did anything wrong, or if they did it was “somebody else.” We didn’t ask Joe Hazelwood his thoughts about how to navigate and regulate oil tankers — we were actually pretty annoyed with his performance — and we should feel the same way about those in charge who caused this mess.

Finally, Tom asked for a specific piece of analysis so here’s one: how did the GSE’s, who don’t originate loans, end up with massive concentrations in certain ZIP codes. For the record, I have no idea. Here are ZIP codes that have have a nine or higher sigma deviation, followed by the number of loans in parens: 85374 (24788), 89030 (21078), 75034 (20382), 92345 (19381), 85225 (17292), 28078 (16797), 92335 (15983), 93307 (15901), 92543 (15708), 92571 (15677), 85132 (15493), 93550 (15431), 92509 (15410). Mean loan volume by ZIP is 1,204, median is 532, standard deviation is 1,688, and n=20,822. If you need more data, just ask.

In the Real Estate hay day, back when they weren’t making any more Real Estate, money started looking for people.

To this day, some remain stubbornly reliant on an obtuse and incomplete interpretation of the “Community Reinvestment Act” as a convenient neon red-herring on which to affix blame.

To suggest (over and over again) that any politician, regardless of spot or stripe, would give a fig, lift a finger, bat a lash, or make anything more affordable for anyone other than themselves is mere cacophony.

Some even insist that banks were strong-armed into making loans for fear of lawsuits from powerhouse outfits like ACORN (Banks afraid of lawsuits…isn’t that cute.)

The money was looking for people for one reason and one reason only.

I’ve said this before (aided by the clarity of hindsight) but the sociopaths had the vision to see this coming and acted accordingly. Presently, there isn’t much left to steal except debt.

How do you steal money from those who don’t have any?

Simple. Just give it to them.

This seemingly chivalrous and selfless act of making the “American Dream” of home ownership more affordable to minorities or the otherwise disenfranchised was actually anything but chivalrous and selfless.

It was the perfect crime.

While keenly focusing on the fact that no one was making more Real Estate, it was “Triple A” safe to assume the value of Real Estate would never do anything but go up.

That “conventional wisdom”, often called “speculative”, “irresponsible” and “reckless” nowadays, was repeatedly and professionally affirmed by experts (lenders’ agents) in the form of property appraisals.

The zenith of all this chivalry is the appraisal and exemplifies the brilliance of the perfect crime.

Precisely at that moment, the vaporous, phantom, wealth of debt is born.

Hold on to your hats all you disenfranchised minorities, you will soon be disemboweled. The money has found you and welcomes you aboard the “American Dream”.

Fast forward…

Actually there is plenty of Real Estate and it never does anything but go down in value. In keeping with the state of affairs we find ourselves in; we are forced to re-examine the definition of “value”.

Once upon a time, the value of something was a direct corollary to what someone would pay for it.

Not anymore. Value is defined in a cell on a spreadsheet[s] and one that never budges.

As chivalrous as the lenders were, way back when they weren’t making any more Real Estate, they had a sneaky suspicion the disenfranchised minorities they tried to help were secretly chiseling deadbeats.

They had to buy “insurance” in case the deadbeats didn’t pay back the captured amount in all those spreadsheet cell[s].

Enter the Credit Default Swap. (Feel free to call this what you like; just don’t call it insurance. If it’s called “insurance”, theoretically it would be regulated as such. Contraption works fine.)

Buying and selling these “insurance contraptions” was especially lucrative and worked like a charm for a few, but was really bad for many.

You see, there was never any intention by these “insurance contraption” companies to actually pay, much less have the ability to pay any of these claims with their own money.

The only logical and prudent thing to do, absent any other possible option, was to once again foist this on the sap of last resort, the taxpayer. Translation: the “insurance contraption” companies got bailed out, and coincidentally, can’t really account for much of their bailout loot.

Fortunately for TBTF, the taxpayers are busy pointing fingers at each other, exactly as planned. They are laughing at us. Oh, and as a bonus, all this chivalry has created clouds over millions and millions of titles and wild deeds as far as the eye can see.

Wow. I’m surprised that you’ve each responded to “Enraged” after he/she dismisses the need for accountability and suggests a moral equivalence between Olenick and Lawler. If the intention was to hijack the thread, “Enraged” has succeeded as the discussion has turned from ethics to housing.

Let me try: Hey everyone talking about ethics is so distasteful and pointless. I heard an interesting discussion somewhere about celebrity lifestyle. Which celebrity has the best cosmetic surgeon, which has the best house? I’d like to hear from some _experts_. Please feel free to entertain me with one-up-manship, navel gazing, and circle jerks.

Judging from the zip codes with the high deviations, I suggest that the loans were for new homes built by Fortune 500 home builders builders and probably originated by one of the builders’subsidiaries or another lender with whom the builder had a cozy relationship. Fortune 500 homebuilders = Cronies, ya think?

We can only hope that, somewhere, Holmes gets on the case and picks up the trail.

I like this idea from Watson’s post:

“Everybody, including and especially the GSE’s, should be required to publicly disclose loan level information, including all pool and tranche performance reporting, and to do so immediately.”

I’ve grown weary of attempts to prop up housing prices, when all the ways tried so far just appear to prop up banks.

Then, when I try and think like an MBS investor, the real time loan performance info is something to die for.

The way the mechanics of how things works is of course different depending on if this is F&F MBS or private label MBS. The real time loan performance would be shared somewhat differentley between the cognizant players.

But I did learn something new from this post – that Watson and Corelogic are at least able to obtain some of this data.

I think at this point I’m just cluttering the comment section; so I’ll promise to stop.

One last question that might sound like something from an Ian Fleming novel or straight from the Illuminati…

Will anyone please explain why these investors are entitled to remain anonymous in foreclosure complaints?

Isn’t it very odd that servicers routinely cite confidentiality agreements between said investors in discovery?

When pressed in court with Motions to Compel they typically respond with Motions for Protective Order.

Why hide if there is no need? Since they do it practically all the time; there must be a need.

So, what is it?

I’ll take a stab at answering my own question.

Because, you know what? Many of these trusts have triggered CDS pursuant to the PSAs that govern them and they no longer exist.

The investors got paid by an “insurance” company that got bailed out and can’t, coincidentally, account for vast chunks of their bailout money.

The remainder of the loans in the trusts that no longer exist and have been extinguished in SEC filings (that’s what they are hiding) continue to be collected by Mr. Servicer Man.

Mr. Servicer Man is not owed that money but continues to collect payments none the less.

If the savvy anonymous investors beat too hard on the servicers, the servicers will remind them that the collateral obligations were not placed in the trusts within the REMIC tax window making them guilty of tax fraud on a wide scale.

That, in addition to the fact they have been already been made whole (and sometimes way more that whole) by their incestuous bailed out “insurance” cronies makes for a very deep rabbit hole.

In this upside down world I think a non-performing loan is worth more than a performing loan.

If anyone can obtain these loan level files I believe it will be Michael and they won’t look very nice under his analytical microscope.

I have no idea where you’re coming from. All I was saying is this: government intervention, thus far, hasn’t helped the foreclosure crisis, on the contrary: it appears to have been at the source of it, starting with a relaxing of common-sense housing policies. All it seems to be doing is push us closer and closer to:
1) revolution;
2) dictatorship or
3) both, successively.

We, as tax payers, own liabilities we never bargained for. We never asked for Fannie and Freddie to be our responsibility. Further, they keep doing exactly what they were doing before we took over… without us having a say on what can be or should be done with them. Since 2008, they have gotten costlier and costlier. Not one of the safeguards has been reinstated and mortgage lending is still business as usual. To top it off, banks that jumped on the bandwagon and profited from the deregulation added their own brand of destruction and insanity by systematically and methodically defrauding the American people.

Bill Black has been advocating re-regulating. Krugman too, to some extent (although harder to figure out exactly where he stands, Nobel prize or not…) Reisch too wants to reregulate. Ellen Brown, Morgensen, Abigail Field, Yves Smith, everyone with half a brain advocates reregulating. There seems to be a point where rehashing ad nauseam what has been and still is going on at the expense of taking action becomes completely counterproductive.

There was a time when America was florishing. I don’t see many economists studying what was working then, why it was working and strongly advocating a return to it. What I see is contant epistolary skirmish while this country keeps going down and down. Pointing the finger at individuals, however misguided they may appear to have been is only that: finger pointing. As far as I can tell, it hasn’t made ONE dent into the mess we’re in. Pointing fingers doesn’t restore a workable system. It is an exercise in futility.

Where are the priorities? Shouldn’t we first fix the mess and then go after the culprits? Right now, neither is being done.

What I’m looking at is this: many people screwed up. Many other people actually committed proven and tangible fraud. The latter are allowed to walk scott free while the former end up villipended.

There a dozens of posts on numerous blogs that discuss the houseing market issues you raise. When one of the FEW posts that discuss *personal responsibilty* is guided away from that discussion then I call foul.

I have tried to be sensitive to the possibility that your earlier comment was not ill-intended. At best, this is not the thread for the discussion you wish to have.

To briefly address your latest comment: I don’t see how we can find the “fix” that you’re looking for when the fundamental problem is that it remains *hugely* rewarding for executives to ignore ethics and sidestep accountabilty – especially when Uncle Sam is the “mark.” You also mangle the message of the people that you mention: Bill Black is focused on tackling ‘control fraud’ and ensuring personal responsibility is important to this effort. Rearranging the deck chairs on the Titanic is NOT the answer.

Dimon surely knows the 2010 Census reports 131.8 million residential housing units for 312.9 million people, including about 17 million empties, so I’m not sure where his housing shortage comes from.

Actually, the 2010 Census showed total housing units at 131,704,730, occupied units at 116,716,292, and vacant units (including for seasonal/recreational/occasional use) at 14,908,518. The 2010 ACS had had higher estimate, and CPS/HVS was even higher. Census is working hard to try to explain these differences, and I have talked several times with them. But strangely, you just referenced wrong numbers, which doesn’t surprise me since you don’t really seem to be very knowledgeable about housing data!

As I explained in a prior post on shadow inventory my approach to computing empties, since the figures were all over and “experts” (that’d be you, coincidentally) said their figures were wrong. I didn’t then and don’t now see the difference as material at these levels: there’s a lot of empty houses. Driving around here in South Florida and seeing the abandoned properties the property appraiser’s say are still occupied I’m going w/ the higher number until the census reconciles the discrepancies, and guessing the true figure is even higher still.

I don’t think you’re proving much by saying there are three different estimates for vacant properties, that the census bureau says there’s something wrong with their data, then wanting somebody else to parrot it back verbatim. I try not to repeat data that’s widely believed to be inaccurate and, on this issue, up until now you usually seem to do the same.

If you want to focus on census data though why don’t you explain why the census reports so many more housing units than the OCC reports mortgaged properties? That one’s a genuine mystery that actually matters, especially given that OO units intuitively seem like they’d be more likely to not carry a mortgage, yet for the OCC figures to be accurate an enormous amount of rental stock would need to be owned free-and-clear. There are lots of emotional reasons a person would want to own their own house without a mortgage, but that falls apart for rental housing.

More to the point why not answer one of the three questions posed, especially since all three are likely to lead to interesting insights:
1. What’s up w/ the 9+ sigma deviations in the GSE portfolios? How did those ZIP codes end up so concentrated w/ GSE owned loans?
2. Why do foreclosures seem to accelerate quickly as loss severity approaches 100%?
3. Why does the census bureau report so many more housing units than the OCC, or anybody else, reports are mortgaged properties?

Three good questions. [Or, if you want to bunt, what do you think is the right count of empties though until the government finishes counting it seems like a lame question.]

Do you actually read the OCC report? Do you undestand that that Census 2010 and ACS 2010 mortgage data only are for owneer occuped homes? Do you actually look seriously at any national data> I’m confused

Dinnertime. And, yes, I do know that. Check out the number of owner-occupied (OO, like I said) properties from the census. Then check out the total number of mortgages the OCC reports (you have to do a little math, but not much). Then compute the number of rentals that would have to be mortgage-free for the OCC figures to balance. Then see if you can explain the discrepancy because nobody else I’ve run into can.

One last post before I feed the horses and chickens. Only a completely clueless and ignorant analyst would have suggested that one of my slides fron many years ago that showed “Franklin, the Fair Housing Fox” was a reference to Franklin Raines. Anyone with de minimus skills would have found that HUD named “Franklin.” The point I was trying to make in this slide from many years ago was the housing market was in serious trouble, but HUD’s response was to have a “Frankln the Friendly Fox” post on its website. An intern with no skills whatsoever could have found that out.
Yet MO couldn’t. MO’s “data driven” skills appear to be de minimus.

Your slide from many years ago was about the same time a lot of people in foreclosure or heading for it signed off on that paperwork. It doesn’t seem so long ago to them.

I’ll absolutely admit I haven’t spent much time looking into the genesis of Franklin the Fair Housing Fox. I can’t see how that has anything to do with housing data, or is something anybody outside DC would spend much time (OK, any time) thinking about.

Given what happened to the housing market shortly after your presentation — the number of people who would be moving to rentals — HUD may have been onto something w/ their information campaign about rental housing discrimination.

Rather than focusing on Franklin how about pointing out where in that presentation there’s a prominent (OK, or even a small) disclaimer that you were working w/ Paulson and he was shorting the housing market, cause I searched a lot harder for that than the genesis of HUD’s housing mascot and couldn’t find it.

So now there’s a fourth question if you’d prefer to answer that, though it’s not really data driven:
4. Didn’t you think it was material when switching to a bearish position on RE to disclose that you were working with a hedge fund manager who stood to make a fortune if RE prices tanked?

Neither post mentions Paulson and his short positions. How about a link to a prominent disclosure back in the day where you unambiguously say “I am tied financially to a hedge fund manager that has made a substantial investment in real-estate prices declining?”

It must be embarrassing to be unable to attack anything of substance despite a thirty-year career in this field, albeit one that ended in an economic collapse so spectacular you decided it was best to move to the country and become self-sufficient. [That was really an overreaction — we’ll clean up the mess if you’ll just stop repeating nonsense like higher foreclosures lead to higher home prices — though having grown up in Southern Indiana I can see the appeal of farm-life even without the survivalist thing going on.]

You aren’t alone in you cluelessness; Census data from Census 2010 vs ACS 2010 vs the most troubled HVS 2010 all show conflicting data on vacancies, and Census folks for the first tine since I highlighted these discrepancies are working on then.

I know you seem confused from your previous post on Census 2010 data vs, other data. It’s very confusing, and I can understand why someone who someone such as yourself doesn’t’ understand all the data being released. I’m guessing you need help, and I’d be happy to help you. The below link to Census 2010 might help you just a bit,

FL, condo-flipper second-home paradise, has a lower percentage of empties than Maine and Vermont and not much higher than Montana, Nevada, and New Hampshire? Do you really believe that? I live in a nice neighborhood and the house to the right of me (well, next to the empty lot – the owner can’t get a construction loan) is empty. In a year the house across the street was empty for months. And the house next to that is an English snow-bird who’s here a month or two each year. That’s one of the nicer FL neighborhoods; there are condo buildings and HOA’s that look like ghost towns.

When I cite census data I usually pull it from the American Fact Finder. Oh yeah, try multiplying 131.7 million housing units by their 11.4% vacant rate. My calculator doesn’t come up with the 14.9 million figure you cited above. Must be a bug in the CPU of my computer though, right?

Did you multiply? The PDF you sent has one table. It says there are 131.7 million housing units and that 11.4 percent are vacant. When the maroom multiplies he gets 15.01 million, which is not 14.9 million. Lest there’s much ambiguity the text above reads “With 11.4 percent of the housing units in the nation vacant in 2010…” Maybe you’re saying there’s 100K seasonal/recreational/occasional housing units in the whole country, though I don’t have to look up the real figure to know that’s obviously not correct.

This sounds like the accounting scandal where you tried to dress up fraud as economics to OFHEO, who not only didn’t buy it but went on to call you out on even trying. Yes, the census figures on empties are incorrect. Yes, their own figures literally don’t add up. Yes, they use different figures in different tables. This is one of the few areas where you’ve accurately shown the census data doesn’t make sense: why are you defending them now?

I am wondering if you software includes subtraction. The link below shows Cesnsus 2010’s estimate of the total housing stock and the occupied housing stock. The difference is the vacant housing stock, which is derived from subtracting the occupied housing stock from the total housing stock.

Bugs Bunny was a pretty sharp wabbit, but the word “maroom” is a little bit strong here , methinks.

Been just quietly reading since I don’t get this stuff at all, especially since all this data and interpretation has left us with a perfectly served economy so what’s to argue about?

But one thing I’ve just had this feeling about for many years is that there is exactly 10,000 people in the US that own all the upscale property in the US.

Suspecting that possibility dissuaded me from even trying to make sense of government data about occupancy or ownership or mortgaged vs. paid off or unsold builder inventory of condos or unsold builder inventory of ghost towns.

Then I’m not even sure if the Census found all our illegal residents, and if they impact or don’t somehow impact the rest of the data somehow.

Plus, when you graduate college nowadays, you move back home with mom and dad and hand them your student loan payments.

So I guess I’m tolerant of some error here, but am willing to hear any confidence building inputs on how good and how granular this data is.

I’ve read Olenick’s past posts and he wasn’t confused, he explained how the Census data differed from the data most other analysts were using. Cheap and dishonest shot.

What I see here is:

1. Olenick has asked a series of questions you refuse to answer

2. He unpacks his computations and conclusions, you refuse to

3. You nit pick at trivia and engage in ad hominem attacks. Name calling in lieu of analysis and argument is generally the strategy of someone who is losing an argument. Even the members of the peanut gallery who can’t follow the discussion can probably see you are flailing.

MO, I understand how a “data driven” person must be frustrarted by your having no understanding of Census housing data, but I’m sure I can direct you to someone who could help you.

As I said, I had a presentation when I was still with Fannie in 2005 on concerns about the housing market, as I have sent you. Paulson asked me to be on one of their boards in response to some of my presentations on the housing markets, which any semi-competent intern could look up. But let’s shift from your embarrassingly misfoccused TL issue, and focus on your ignorance of US housing data. I could help you, but I could also direct you to certain Census analysts if you would like. Clearly you need help.

And you don’t seem to get that Olenick’s database is now one of the best out there. As I indicated earlier in the thread, the regulator that is doing the most extensive research and analysis into the housing market, and yes, they have very serious economists on staff, is using Olenick’s data over Corelogic’s.

I have a lot of misgivings about CoreLogic myself. As an example, I cannot understand why CoreLogic is paying my real estate taxes or my homeowner insurance. Under what authority? It isn’t party to my mortgage contract. It isn’t party to any subsequent transfer/assignment. What is its role?

I have done quite a bit of research and I become increasingly suspicious of it.

CoreLogic appears to be to accounting what MERS is to land records: some computerized system allowing for increased opaqueness of servicers’ accounting. As a result, anyone heavily quoting CoreLogic become suspicious to me…

I don’t post to any site. I told calculated risk that it could post my occasional commmentaries (used to be a daily, but had health issues) whenever CR wanted to. But I don’t “post” to any blog or website. Never have. Most folks know this. Not sure why you don’t know what most folks know. Hard to tell.

Thank you: I’d appreciate the opportunity to talk to the census bureau.

I can see how Paulson would want your help, but if you were working on analysis rather than politics or promotion why his BOD? You seem to be confirming the issues I raised.

I mean, I’m surprised he hasn’t called looking for my own data, but if he did I’m sure he’d be like other clients: when visiting we’re usually parked in conference rooms. The only way we get to the boardroom is if it’s not being used and we’re presenting to lots of people.

I’ve been doing this my whole life and people listen to their techies, especially when we’re gathering data or working on PD. They even respect us, though people in this field tend to be quirky. But even on the BOD’s of tech companies there’s usually few techies because we’re typically terrible at internal and external politics; it’s an occupational hazard of working with computers and numbers too much.

After seeing a presentation I made discussing concerns about the housing outlook, an analyst who worked at Paulson & Co. suggested that I might be one of a few economists that would make monthly reports for one of his funds. As I said, it was AFTER they saw a presentation I made. I was one of three economists on the advisory board (not BOD). I made a monthly presentation using data. I received a fixed fee (here I was a maroon!). There is a rather large difference between being an economist on an advisory board that a BOD member.

On the fixed fee you probably acted more like an economist. One of those businesses you were poking fun at became the center of a dot-com high-flyer, but I sold it to them for cash. They wanted to pay stock, or a mix, but valuation already seemed frothy for a business that made no money, in a field that wasn’t understood, and this was before the dot-com boom.

One Bloomberg article says that Alan Greenspan replaced you, but Greenspan is listed on Paulson’s BOD, though the only other person on the BOD is Paulson. There are two people company’s, but two people BOD’s are unusual (understatement). Whether you were on an advisory board of the BOD you should have disclosed that though. I’ve put disclosures in blog posts when I had any type of financial position. They’re not difficult; just tack on at the end that you’re long or short, or somebody you’re working with is. I don’t know if there’s more legal terminology needed though as long as the substance of the disclosure is accurate and complete I’m guessing the SEC is likely to be fine, and investors on alert assuming they read.

Back to questions, and here’s another more timely and maybe interesting one: less abstract. Yesterday two people asked me whether it’s a good time to buy a house. My answer is no: shadow inventory is unknown but steep, I think investors are beginning to put some price support into a floor but that’s because of the low foreclosure volumes because of Robogate, so — for a non-investor — there’s not much upside (little risk of rapid price increase), and lots of downside (blasting open the foreclosure floodgate and see inventory spike).

What’s your opinion? Both are solid middle-class families, both in their mid to late 30’s. Both are married, one with one young child and the other with two, and for both couples one spouse is working and the other underemployed. One is a computer programmer and the other some type of specialized welder that’s apparently in-demand because it requires specialized training. Both currently live and would purchase homes in Palm Beach County, FL.

I have no idea what you are talking about. I was an economist on an advisory board. I also wrote a daily commentary, and everyone who got it knew I was on that advisory board. What are you saying I should have disclosued and to whom else? You are ranting, but I have no idea what you are saying. What, specifically, are you saying I should have done, since I was writing a daily and private commentary where everyone who received it knew that I was one of three economists on one of Paulson’s advisory boards. Disclose more that that to whom? You are ranting, which is consistent with your pyschology profile.

If, by the way, you have a great database, you need to share it with the public. Where can I find that database, and I will write about it.

obviously you didn’t provide enough informaton, which is sorta normal. Don’t know the potential buyers financials, where they are looking to buy, what their financial situation is. So with no relevant information, I can’t comment.

Caution: there is a least one poster on this site that uses a pen name. Obviously a bit red flag.

Yes I have data. Of course I have data. That’s what I do, aggregate data.

I don’t give it away for free or my family would starve. Even if I wanted to there’s too much data unless somebody has real databases and knows how to use them: Excel caps out a million rows and runs pretty slowly long before then. But I will give out summaries, work with academics, and others.

I typically don’t analyze: I aggregate. I know there’s a likely problem when I see double-digit sigma deviations in large record-sets, or over 50K judicial foreclosure docket entries citing “errors,” or accelerated foreclosures as loans approach a 100% loss threshold.

Here are the lyrics to Bon Jovi’s “Have a Nice Day,” which I hope you have.

Why, you wanna tell me how to live my life?
Who, are you to tell me if it’s black or white?
Mama, can you hear me? Try to understand.
Is innocence the difference between a boy and a man?
My daddy lived the lie, that’s just the price that he paid
Sacrificed his life, just slavin’ away.

Ohhh, if there’s one thing I hang onto,
That gets me through the night.
I ain’t gonna do what I don’t want to,
I’m gonna live my life.
Shining like a diamond, rolling with the dice,
Standing on the ledge, I show the wind how to fly.
When the world gets in my face,
I say, Have A Nice Day.
Have A Nice Day

Take a look around you; nothing’s what it seems
We’re living in the broken home of hopes and dreams,
Let me be the first to shake a helping hand.
Anybody brave enough to take a stand,
I’ve knocked on every door, on every dead end street,
Looking for forgiveness,
what’s left to believe?

Ohhh, if there’s one thing I hang onto,
That gets me through the night.
I ain’t gonna do what I don’t want to,
I’m gonna live my life.
Shining like a diamond, rolling with the dice,
Standing on the ledge, I show the wind how to fly.
When the world gets in my face,
I say, Have A Nice Day.
Have A Nice Day.

[Guitar Solo]

Ohhh, if there’s one thing I hang onto,
That gets me through the night.
I ain’t gonna do what I don’t want to,
I’m gonna live my life.
Shining like a diamond, rolling with the dice,
Standing on the ledge, I show the wind how to fly.
When the world gets in my face,
I say, Have A Nice Day.
Have A Nice Day.
Have A Nice Day.
Have A Nice Day.
Have A Nice Day.

When The world keeps trying, to drag me down,
I gotta raise my hands, I’m gonna stand my ground.
Well I say, Have A Nice Day.
Have A Nice Day
Have A Nice Day

And be careful; some folks on this post use a pen name, which everyone agrees is a red flag for mischief.

Every day, several times a day, a thought comes over me.
I owe more debts than I ever can pay back more money than I’ll ever see.

I walk around the streets of Coney Island. I look through the windows of every store. I peep through the hallways and the doorways and I think of this debt I owe.

I feel like a piece of crushed wreckage, some smashed car in a salvage yard, a vision of an old newspaper blown across an old navy yard, a curbstone chipped and beaten, a piece of gum stuck to a shoe, an empty pack of used matches, an empty version of you.

People stroll and they saunter like papercups thrown in the trash. They’re crawling all over the sidewalks, their wallets stuck in their pants. And it comes over me like a mist rising, a fog falling over a ship. The bell is ringing out danger, but it’s too late to cancel this trip.

I see the mist rising before me, my hand reappears by my face. By my waist a cold empty pocket, on my wrist the tears from your face. And I think of what I thought this cold morning, it’s the same thing I’m thinking at three. I owe more than I can ever pay back, more than I’ll ever see.

I think of what I thought this cold morning, I think of what I’m thinking at three. At ten and at midnight the same damn thing, I wish this debt was about money.

Who’s using the pen name (or maybe the question is who, besides the two of us, aren’t)? Yves writes under a pen name but her real name’s been in the NYT: even Wikipedia gets it right.

Bloomberg’s predicting RE pricing down 10%. So much for the floor. If they actually start to liquidate the shadow inventory, or price pressures start to push down rents and all those rentals go back to the auction block, I think that number’s low. What do you think?

Personally, I only respond to people who use their real name including SS number, post a jpg of their drivers license, birth certificate and thumb print, and id number of their DNA file at the National Repository of Personal Title.

But on the issue of housing prices, I think it’s very much dependant on when and at what rate all this shadow inventory hits the market.

Just eyeballing the local market here it appears asking prices on new listings are above recent comps by a significant amount, maybe 10%.

But who knows how that turns out in the short term. Buyers pay up? Or no sales volume for a while? Banks still hold back shadow inventory?

I did a quick check and found an 1,840 sq. ft. condo not far from me. It’s on the sixth floor on the beach w/ beach views and a balcony overlooking the ocean. It’s on the beach side: walk down and onto the beach. Asking price is $359K so a $71,800 down-payment plus closing costs yields a P&I of $1,371.14/mo at 4% for 30-years. Add $1,028 HOA, which include insurance, and $321.88/mo in taxes and it’s $2,721.35.

I did a quick check and there’s a condo for rent on the sixth floor about a mile away. It’s on the other side of the Ocean Ave.; that is, you have to cross the street to get to the beach and there’s no ocean view. The building looks much dumpier, the neighborhood isn’t as nice, it’s farther from the bridges, and it’s 1,234 sq. ft. Rental price is $3K.

Maybe people are strapped for down-payments or can’t qualify for loans, but that seems less likely for somebody who could put down $9K first/last/damage deposit plus pay $3K/mo. Also, the HOA fees are likely to go down in the nicer building as it fills up; lots of condo’s are empty or in foreclosure, pumping up fixed costs to a smaller number of people.

I’ve written that it’s a risky time to buy w/ the shadow inventory the size it is but the rental market seems like it’s running out of control and creating its own micro-bubble for backyard (OK, or even P/E) RE speculators.

Between Passover and the most massive data project of my life my life itself I’ve been overwhelmed but write me by email, mfolenick -at- gmail.com.

You’re an interesting character, like everybody else in MBS-land I’ve come across. The normal rule is you can choose two of the three: brains, personality, or financial success. Honestly, it works fine for most investors except in this field where people seem to have either none or d), all of the above. I’m never gonna’ be impressed w/ Project Libra — balancing or re-balancing (*cough*) the scales — but maybe it’s time to open a dialog about what to do moving forward.